Berkshire Hathaway shareholders walk by a video screen at the company's annual meeting in Omaha May 4, 2013.

Credit: Reuters/Rick Wilking

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(Reuters) - Warren Buffett's Berkshire Hathaway Inc plans to shed much of its 40-year-old investment in Graham Holdings Co, the former publisher of the Washington Post, and swap most of its shares for a Miami television station and other assets.

According to a Wednesday regulatory filing, Berkshire plans to turn over more than 1.61 million Graham shares worth in excess of $1.1 billion. It will receive ABC affiliate WPLG-TV in Miami, at least $400 million of Berkshire stock now owned by Graham, and cash.

The swap is designed to be tax-free, saving both companies millions of dollars. It values the TV station at $364 million, the U.S. Securities and Exchange Commission filing shows.

"I am sure this is a mutually beneficial transaction for both companies," Buffett said in a statement. "While this transaction will greatly reduce our position in Graham Holdings, our admiration for the company and its management is undiminished."

Buffett, the world's fourth-richest person, is shedding more than 90 percent of one of his oldest and most successful investments and reducing his ties to the Graham family.

The swap would leave Omaha, Nebraska-based Berkshire with roughly 100,000 of the 1.73 million Graham shares it owns. Those shares were worth more than $1.2 billion as of Tuesday. Berkshire paid $11 million for its stake in 1973.

Buffett, 83, had been a longtime confidant of Katharine Graham, the former Post chief executive officer and mother of current CEO Donald Graham. Katharine Graham died in 2001, and Buffett stepped down from the company's board in 2011.

"Warren Buffett's 40-year association with our company has been extremely good for our shareholders," and WPLG employees can now join "one of the greatest companies in America," Donald Graham said in a statement.

The transaction is subject to the completion of final paperwork, regulatory approval and other conditions.

CALLING IT A DAY

Graham Holdings changed its name from Washington Post Co after selling its flagship paper last year to Amazon.com Inc CEO Jeff Bezos.

The Washington-based company's businesses now include education company Kaplan Inc, as well as other TV stations and online news website Slate.

"Buffett has been a great friend of the Graham family, but the business relationship may have run its course after the Post was sold, and they may have decided to call it a day," said Andy Kilpatrick, who plans next month to release a revised version of his book, "Of Permanent Value: The Story of Warren Buffett."

Kilpatrick said the tax-free nature of the transaction made the swap "a beautiful business deal" for both companies.

Buffett's plans for the TV station are unclear, although it is not Berkshire's first foray into the media business.

The company already owns dozens of newspapers, including its hometown Omaha World-Herald. It has more than 80 businesses overall, including Geico insurance, the BNSF railroad, MidAmerican Energy and Dairy Queen ice cream.

A spokeswoman said Buffett was not granting interviews on the transaction with Graham Holdings. Donald Graham was not immediately available for further comment.

ABC is owned by Walt Disney Co.

In afternoon trading, Berkshire Class A shares were up 0.1 percent at $187,345, and its Class B shares were up 0.3 percent at $125.03. Graham stock rose 3.3 percent to $732.79.

(Reporting by Jonathan Stempel in New York; Editing by Jeffrey Benkoe and Lisa Von Ahn)